Presentation outline 1. What is the role of a profession? 2.
Contextualization the Role of Valuation Profession 3. Challenges
facing the Profession 4. Reflections on Growth of the Profession 5.
Emerging roles 6. Conclusions 2
Slide 3
What is the role of the profession As individuals Professing to
serve with high level of skills, competence/experience and
integrity (ethical conduct) As Professional Association/Society
primarily educational and informational through publishing
professional papers, journals, newsletter etc developing
professional excellence- by defining and setting standards,
promoting high standards of quality Assuring the public of quality
standards through awards for their members. Recognition of its
members by the public As Professional Regulators Professional
societies for years regulated their members practice, protecting
interests of the public Current trends, professionals regulated by
government through Statutory Bodies. 3
Slide 4
Contextualizing the Role of Valuation Profession? Asset
Negotiation value Owner value Collateral value Synergy
valueCommunication Emotional value Investment Value Market
valueFair value 4
Slide 5
Valuers assist investors towards the optimal business value
Final Value Alternate opportunity Distress sale Control Premium
Emerging markets Illiquidity Discount Strategic Positioning 5
Slide 6
Competencies Requirements a) Basic Degree Qualification BSc
LMV? BSc PFM, BSc REFI? OR ANY Degree? b) Post Graduate
Qualification? Professional Training Apprenticeship Professional
Examinations c) Professional Attitude Through specialist training?
Self-acquired? Keeping abreast with and use of technology 6
Slide 7
What is the Role of Registered Valuer in Tanzania? How does one
get to know about who is a Valuer in Tanzania? Do we have Valuers
outside the Lands Sector Which law regulates Valuers Are practicing
Valuers conversant with incidences requiring their skills? Do
practicing Valuers reach out to the society seeking recognition of
their valuable and indispensable services to the society? Who
promotes Valuation Profession in Tanzania? 7
Slide 8
Challenges facing the Valuation profession Globally (as per
Nick French,(2013)): a) Banking, real estate and other sectors
experienced material losses in the financial economic crisis (FEC)
of 2009 b) Valuation issues viewed as part of the financial crisis
problem c) Accounting standards setters (FASB) and regulators (SEC)
raised concerns regarding inconsistent application and review of
valuations d) Inability of the valuation profession in addressing
perceived shortcomings in its practice 8
Slide 9
Challenges facing the valuation profession Its origin was
tattered and continues to pose problems: in Tanzania difficult to
convince that valuation is not necessarily land sector discipline!
University education programs limited either to undergraduate
(Commonwealth) or post graduate (elsewhere), but in UK, already
split between these two! Increasing popularity of valuation related
subjects- land administration, facilities management, marketing,
property economics/studies etc Competition from other professional
bodies esp civil engineering, accounting and financing Adoption of
automated valuation practices e.g CAMA, desktop valuations 9
Slide 10
Challenges facing the Valuation (cont) Nationally (Tanzania) a)
Non-recognition of the Valuers roles mainly in the business/finance
sector (limited role) b) Not-so-clear entry qualification to the
profession: e.g ARU prepares students in SRES to graduate as
Valuation specialists, Land administrators with expertise in legal
issues and Real estates specialists (Kasseva, 2007) c) Accuracy of
Valuation advices (increasing complaints from banks and general
public on inconsistent and objective valuations d) Lack of
professional fraternity internal squabbles and rivalries 10
Slide 11
Reflections on the Pattern Growth of the Valuation Profession
Fast growth BUT fast decline(Baxter, 2007) a) Too many changes as
the professions desired for i. Integrating -cross border training
and practice, ii. consolidation aligning to social-economic changes
both in professional and academic training e.g RICS from as early
as 1893 iii. Unification- through professional societies 11
Slide 12
Valuation as a Profession b) Polarized perceptions of the
profession: CASLE formed in 1969 and set up an accreditation
program Land Economy Surveying Vs General Practice Surveying/Estate
Management and Valuation CASLE Curriculum emphasis placed on
management of natural resources (Ghana, Kenya and Tanzania) c) USA-
grew from agency/marketing organized under the National Association
of Realtors in 1908, later to Land Economics after Richard Ely,
then Real Estate Appraisers after Merke in 1927 d) Prospered in the
USA through Ellwoods, Richard Ratcliff and Graaskamp main
architects for aligning it with financial sectors introducing
concepts of Capital Pricing Models, the Ellwood Formula for Cap
Rate Estimating, and improved on the HABU- from the highest price
to most probable price in 1965 12
Slide 13
Strategic Versus Operational Roles of the Profession As an
industry-based profession, training of valuers tended to be through
polytechnic and technical universities With growing recognition of
the importance of strategic management in the business sector,
expenditure on assets used in business has had to be reviewed
Consequently, the need for Valuation Advice and Asset management
has been broadened. 13
Slide 14
Top Management Department Level Management Operational Level
Management Portfolio Management Asset Management Property
Management Facilities Management Property Management 14
Slide 15
Strategic Level Roles (aka FM) Top Level Management
Departmental Level Management Survival of the Organization
Portfolio Selection and Sizing Resources Assessment and
Requirements Maximize use of the available assets Optimal
Utilization of allocated resources Measuring performance of asset
classes Revaluation of Assets Best Practice Comparisons 15
Slide 16
Operational Management Functions Operational Level/Valuation or
Property Management Mundane functions Valuation for various
purposes (in compliance with the best practice ever or standards)
Rent advice Repairs Management of lettings etc Business related
Functions Appraisals/Feasibility analysis of ways to improve
respective asset/property Life cycle cost management
(teretechnological approaches) Compliance requirements to various
standards e.g International Property Maintenance Code 2012, IFRS,
IVS etc 16
Slide 17
New Agenda for Valuers 1. International harmonization of
professional valuation standards To realize valuation is crucial in
both finance and land sectors To protect consumers of valuation
against negligent and fraudulent valuers To set common benchmarks
to evaluate performance Opportunities are abound for high
professional skills 17
Slide 18
New Agenda for Valuers 2 Integrating finance models in
valuation methods Recognize the vital sectors-Growth of capital
markets and securitization has moved the historical remit of the
profession in land sector to a business/finance sector Need to
grapple with cash flow related techniques to respond to the market
aspirations 18
Slide 19
Conclusions TIVEA Members to averse themselves with the growing
needs of the profession Think of arrangement to accommodate the
growing business-related valuation requirements (the emerging
mortgage market-housing finance, and asset valuation) Enhance grip
on the land-sector valuation practice with a view of reducing
complaints and blames against the valuer. Adopt a more pragmatic
view of the growth of the profession, prepare itself towards the
strategic needs of the profession 19
Slide 20
Conclusinons TIVEA Members to appraise themselves on
professional development in the industry such as IVSs - July 2013
The IVSs underwent a major rewrite and improvement process between
2009 and 2011. The standards include requirements for
commissioning, undertaking and reporting valuations of all types of
asset for a wide range of purposes. RICS Valuation Professional
Standards (Red Book) The RICS has fully adopted the 2013
International Valuation Standards Council (IVSC) Valuation
Standards As a result, the Red Book 2014 came into effect in Jan
2014. 20
Slide 21
Valuation Approaches Since the publication of the IVSC
Valuation Standards, there is now a hierarchy of valuation
definitions: Valuation Approaches, Valuation Methods and, as a
subset of the methods, techniques or models. The IVSC recognises
three approaches (Income, Cost and Market) that are all based on
the underlying economic principles of price formation. The
appropriate basis will vary depending on the purpose and nature of
the valuation. 21